NEFT and RTGS: Mechanisms for Money Transfer in India
NEFT and RTGS are two main mechanisms to transfer money from one bank to another bank in India. Transferring money between two accounts in the same bank is pretty straightforward and is an internal matter of the bank. It does not have to deal with other banks and their protocols. However, when one bank wants to send money to another bank in India, there is a defined mechanism that has to be followed, and hence NEFT and RTGS come into the picture. Both these systems are maintained by the Reserve Bank of India.
NEFT – National Electronic Fund Transfer
NEFT is a system of transfer between two banks on a net settlement basis. This means that each individual transfer from one account to another is not settled or processed at the same moment; it is done in batches. A lot of transactions are settled in one go in each batch. Presently, NEFT services are available from 8:00 am to 6:30 pm on weekdays (Mon – Fri) and from 8:00 am – 12:30 pm on Saturday.
Any NEFT transfer done between 8 am – 5 pm generally gets settled on the same day, but if you deposit the money after 5 pm, it will be settled the next working day. In the case of Saturday, any money deposited between 8 am – 12 noon will reach the same day.
RTGS – Real Time Gross Settlement
RTGS is a system of money transfer between two banks on a real-time basis, which means the moment one bank account transfers money to another bank account, it's settled at that time itself on a real-time basis between the banks. However, the beneficiary bank has to make the final settlement to the bank account within two hours of receiving the money.
RTGS is the fastest possible money transfer between two banks in India through a secure channel.
NEFT and RTGS are two main mechanisms to transfer money from one bank to another bank in India. Transferring money between two accounts in the same bank is pretty straightforward and is an internal matter of the bank. It does not have to deal with other banks and their protocols. However, when one bank wants to send money to another bank in India, there is a defined mechanism that has to be followed, and hence NEFT and RTGS come into the picture. Both these systems are maintained by the Reserve Bank of India.
NEFT – National Electronic Fund Transfer
NEFT is a system of transfer between two banks on a net settlement basis. This means that each individual transfer from one account to another is not settled or processed at the same moment; it is done in batches. A lot of transactions are settled in one go in each batch. Presently, NEFT services are available from 8:00 am to 6:30 pm on weekdays (Mon – Fri) and from 8:00 am – 12:30 pm on Saturday.
Any NEFT transfer done between 8 am – 5 pm generally gets settled on the same day, but if you deposit the money after 5 pm, it will be settled the next working day. In the case of Saturday, any money deposited between 8 am – 12 noon will reach the same day.
RTGS – Real Time Gross Settlement
RTGS is a system of money transfer between two banks on a real-time basis, which means the moment one bank account transfers money to another bank account, it's settled at that time itself on a real-time basis between the banks. However, the beneficiary bank has to make the final settlement to the bank account within two hours of receiving the money.
RTGS is the fastest possible money transfer between two banks in India through a secure channel.